Investment, Sales Constraints and Profitability in France 1957-1985

Sneessens, Henri;Maillard, Bénédicte
(1988) , 22 pages

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  • Sneessens, HenriUCLouvain, Faculté Libre de Sciences Economiques de Lille
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  • Maillard, BénédicteFaculté Libre de Sciences Economiques de Lille
    Author
Abstract
This paper is devoted to the analysis of the investment behavior of the firm in the context of a quantity rationing (or disequilibrium) model with monopolistic competition on the goods market. Investment is entirely profit-driven, as in the theory of investment. The profit variable is however decomposed into three components: the markup rate on variable cost, the capacity utilization rate and the discrepancy between the optimal and the actual capital-labor ratios. The model has the same long run implication as an accelerator model if and only if the optimal capacity utilization rate is constant in the long run. The suggested quantity rationing model is estimated on French data, over the period 1956-1985. The emphasis is on the investment equation. The parameter estimates are shown to have remained fairly stable over time.
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Sneessens, H., & Maillard, B. (1988). Investment, Sales Constraints and Profitability in France 1957-1985 (Working Papers Institut des sciences économiques 8803). https://hdl.handle.net/2078.5/281045